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[size=36]Al-Kazemi's advisor explains the impact of the US Federal Reserve raising interest rates on the Iraqi economy[/size]
Economie| 06:26 - 06/05/2022
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Baghdad - Mawazine News
, the financial advisor to the Prime Minister, Mazhar Muhammad Salih, explained today, Friday, the implications of raising interest rates by the US Central Bank on the Iraqi economy, while identifying two matters for managing currency risks, foreign reserves, exchange rates and interest.
Saleh said, "The implications and impact of raising the interest by the US bank on the Iraqi economy are twofold, the first is that the country is the debtor, as the increase in interest on the US dollar will lead to a rise in the cost of loans withdrawn in dollars, especially those whose annual interests are determined on the basis of market interest or (( Moving) in dollars, which is indicated by the financial markets as rising, such as the interest (Libor), which is the interest of lending and borrowing between banks in dollars in the London market, and even if some loans carry a fixed interest on the same loan, but they carry (a hedging risk margin around the fixed interest itself) and it is called (spread). This is to avoid market fluctuations,” noting that “the latter (the spread) will rise automatically, taking into account the high interest risks.”
The statement added, "As for the second part, and that the country is the creditor, investing in dollar deposits or US bonds for Iraq will be expected to raise returns in the future, with US interest rates mostly rising, and it depends on the nature of the contractual interest, is it fixed or variable?" If the interest on dollar bonds are It has a fixed contractual character until the maturity date, and it is required to liquidate it in the secondary market and transfer it to liquid cash for various purposes.
He pointed out that "in all cases, the country's official investment department remains the most capable party in good hedging, by managing foreign currency risks or foreign reserves in dollars, especially exchange rate and interest rate risks, through good diversification and reducing market risks for Iraq's financial portfolio." Ended 29 / h
, the financial advisor to the Prime Minister, Mazhar Muhammad Salih, explained today, Friday, the implications of raising interest rates by the US Central Bank on the Iraqi economy, while identifying two matters for managing currency risks, foreign reserves, exchange rates and interest.
Saleh said, "The implications and impact of raising the interest by the US bank on the Iraqi economy are twofold, the first is that the country is the debtor, as the increase in interest on the US dollar will lead to a rise in the cost of loans withdrawn in dollars, especially those whose annual interests are determined on the basis of market interest or (( Moving) in dollars, which is indicated by the financial markets as rising, such as the interest (Libor), which is the interest of lending and borrowing between banks in dollars in the London market, and even if some loans carry a fixed interest on the same loan, but they carry (a hedging risk margin around the fixed interest itself) and it is called (spread). This is to avoid market fluctuations,” noting that “the latter (the spread) will rise automatically, taking into account the high interest risks.”
The statement added, "As for the second part, and that the country is the creditor, investing in dollar deposits or US bonds for Iraq will be expected to raise returns in the future, with US interest rates mostly rising, and it depends on the nature of the contractual interest, is it fixed or variable?" If the interest on dollar bonds are It has a fixed contractual character until the maturity date, and it is required to liquidate it in the secondary market and transfer it to liquid cash for various purposes.
He pointed out that "in all cases, the country's official investment department remains the most capable party in good hedging, by managing foreign currency risks or foreign reserves in dollars, especially exchange rate and interest rate risks, through good diversification and reducing market risks for Iraq's financial portfolio." Ended 29 / h
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